Co-ops worry about USDA reorganization

WASHINGTON -- Co-op leaders are worried the U.S. Department of Agriculture will be reorganizing its division that collects statistics and does research on co-ops. They're concerned the changes could lead to a decline in services for co-ops that USDA has provided since the Cooperative Marketing Act was passed in 1926.

Using authority under the farm bill, USDA is making plans to include the Rural Business-Cooperative Service in a reorganization under which the RBCS will be the lead agency in creating a "community economic development" approach that will include housing, community facilities infrastructure and business and cooperative programs.

But on March 6, the National Cooperative Business Association, CLUSA International and the National Council of Farmer Cooperatives wrote Agriculture Undersecretary for Rural Development Lisa Mensah a letter that said "many in the cooperative community have been concerned about what a possible reorganization might entail, how vital services will get administered, and how cooperatives ultimately will retain dedicated resources for purposes of education and development."

In an interview, Charles Conner, president of the National Council of Farmer Cooperatives, said, "This is the only organization that aggregates statistics relevant to the co-op business model. This is huge in terms of the community and knowing what is going on out there in the co-op business world.

"Farmer-owned co-ops are a unique business structure -- we are owned by the very members that we serve," Conner added. "We have different taxation policies, government, legal and antitrust issues.

"Historically, USDA has been a partner in making sure this educational and research system is meeting the needs of a unique business structure," he said.

Conner, who served as agriculture deputy secretary in the Bush administration, acknowledged "that has been getting less and less over a long period of time. That was happening when I was at the department, but there is still a big research function occurring."

It is important, he added, that employees working on co-op matters have the specialized knowledge to do that work.

The National Farmers Union, a farm group long active in the co-op movement, also expressed concern.

"NFU supports a robust cooperative research and extension service at USDA," Chandler Goule, the NFU senior vice president of programs, said in an email to Agweek.

"Any efforts to reduce their capacity or services would be of great concern to NFU," Goule said. "Co-ops provide much-needed buying and selling power to family farmers and ranchers, and it's important to continue to keep this program funded and effective."

Asked by an NFU member at the group's convention in Wichita, Kan., on March 16 about USDA's plans to reorganize the co-op function, Agriculture Secretary Tom Vilsack said, "This is what drives me nuts about Washington. Congress says 'We are going to cut your budget.' They don't cut the programs you like, they cut the salaries and expense lines."

The Rural Development mission area, Vilsack said, "decided to look at how they have structured their offices" and "because they begin that conversation, folks start rumors that we are not interested in co-ops.

"We obviously understand the important role of co-ops," he said. "If we were going to go out and significantly change everything, obviously the [supporters] would run to the Hill. Why do they do that, why don't they pick up the phone?"

Vilsack said the letter from the co-op leaders is a "fair request," and he will inform them of what the department is planning.

But at a March 18 House Agriculture Appropriations Subcommittee hearing on the budget, lower level USDA officials appeared defiant.

House Agriculture Appropriations Subcommittee Chairman Robert Aderholt, R-Ala. told Mensah "the news of the reorganization was a surprise."

Mensah replied she is "excited" about the authority the 2014 farm bill has given USDA to provide better service, and turned the issue over to RBCS Administrator Lillian Salerno.

Salerno said the agency is "always looking for better ways" to conduct its business but has only had "very preliminary discussions" about reorganization.

"At no time have we come away from our commitment to cooperatives," Salerno said, noting co-ops work on food hubs and the division publishes a magazine on co-ops.

Salerno added, "We absolutely know our obligations" about briefing Congress on reorganizations.

She said when the effort has move far enough along to brief "my undersecretary," she will do that and then come before the subcommittee.